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When governments lead us astray

LiveMint logoLiveMint 19-07-2017 Biju Dominic

A Bengali migrant labourer became a millionaire four days after he had landed in Kerala with Rs100 in his pocket.” “The man who bought a lottery (ticket) from the money he borrowed for his sister’s marriage, wins one crore.” Such rags to riches stories about lottery winners are a staple in Kerala’s vernacular press.

With more than 140,000 field workers actively involved in selling seven weekly lotteries and six bumper lotteries in Kerala, it is almost impossible not to encounter these sellers of “goddess of luck”, everyday, on Kerala’s streets. The state government is expected to rake in close to Rs10,000 crore revenue from lottery sales this financial year. This isn’t a Kerala phenomenon alone; lottery sales is legal in 12 other states.

Lottery sales is a boon for several state governments desperate to garner revenue. But what is the financial, and more so, the behavioural effect of lotteries on the common man? 

Several studies in the US have shown that low-income Americans who need money most are the ones more likely to buy lottery tickets. There is no reason to believe that the situation is any different in India. People who can ill-afford even basic amenities of life are the ones who are most likely to purchase lottery tickets in the hope that a stroke of luck will dramatically change their circumstances. 

Studies have shown that people whose reward circuitry is inherently under active have a higher chance of seeking big thrills. This may explain why poorer people with no opportunities to get many material rewards in life have a higher tendency to buy lotteries.

Until recently, psychiatrists regarded pathological gambling as more of a behavioural compulsion than an addiction. In reality, gambling and lotteries are far more similar to drug addiction than we realized. Recently, neuroscientists have redefined addiction—it is no more a craving or a dependence on a chemical. Today, addiction is defined as “repeatedly pursuing a rewarding experience despite serious repercussions”. Thanks to the recent studies, the latest edition of Diagnostic And Statistical Manual Of Mental Disorders has included pathological gambling as an addiction. 

Millions are buying lotteries on a daily basis and so are indulging in this addiction on a regular basis. There are many behavioural biases that sort of exacerbate this addictive behaviour. 

Almost no one wants to believe that the system of lottery and other forms of gambling wins only when a large number of people lose. But many regular lottery buyers seem to believe that they can game the system. Many of them have their favourite “lucky” numbers; searching for a ticket with that number itself is an exciting, dopamine-generating exercise. Awaiting the results of the daily draws in the newspaper with great anticipation too is a dopamine-releasing pleasurable experience. 

In any contest, near-misses are exciting because it makes one believe that one is a winner even when one has lost. The governments who run lotteries have understood this behavioural trait very well. So, consolation prizes for the first prize-winning number from non-winning series and, tickets that match the last four digits of the winning number, etc., are all given smaller prizes. These heighten the feeling of “near miss’ and push buyers to participate in future lotteries with renewed hope. 

A strong belief that helps overcome the losses an individual will inevitably encounter in a lottery is the concept of regression to the mean. In statistics, if a variable is extreme on its first measurement, it will tend to be closer to the average on its second measurement. This is a technical way to say that in the case of a very large number of incidents, things tend to even out over time. People who buy lotteries tend to apply this statistical principle incorrectly. As they buy lotteries and lose money again and again, they tend to believe that they are slowly but surely moving towards winning a lottery. 

Lest they feel guilty that they are wasting their hard-earned money, governments have devised several strategies to help rationalize the actions of the lottery buyer. The Kerala government has named one of its lotteries “Karunya” (kindness) lottery and has announced that profits from this lottery will be used to help in the treatment of the needy. This is the heights of chicanery, where this small act of kindness is used to whitewash a much larger crime carried on by the government.

Among those selling lotteries, there are a few who are invalid. Governments create advertisements that play up the helplessness of these lottery sellers to create a feeling that by buying a lottery ticket, one is not indulging in an addiction, but one is helping the needy. 

But the worst impact of lotteries is that it is a perfect example of a low-effort, high-return phenomenon. The narrative that showcases relatable people beating the near-impossible odds creates a belief in that one does not need to work hard to achieve success in life. These narratives build a belief that life’s successes are created not by hard work but by the flip of a slot machine. This is the worst message that a government can convey to its citizens, more so, its younger generation. It might not be a coincidence that states like Kerala, Punjab, Mizoram, Goa, Manipur that have legalized lottery sales are also states that have problems with high levels of alcoholism, drug abuse and other addictions. 

We need to wean the common man from lotteries, a state-sponsored addiction that makes a very large number of people lose just to make a handful of individuals and a few state governments jubilant every week.

Biju Dominic is the chief executive officer of Final Mile Consulting, a behaviour architecture firm.

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